Tata Motors' turmoil over chief's death
Fin24

Tata Motors' turmoil over chief's death

2014-02-02 13:55

New Delhi - Tata Motors is launching two models this week for India's Auto Expo but the sudden death of its operations chief has left the vehicle giant in turmoil as it struggles to rebuild its fortunes.

Tata Motors, a unit of giant Indian tea-to-steel conglomerate Tata, has become almost totally dependent on British prestige marques Jaguar and LandRover (JLR) for profit while its domestic woes go from bad to worse.

Tata Motors managing director Karl Slym had been seeking to drive a revival of India's largest vehicle group when police last weekend said he had plunged from a Bangkok hotel upper floor in an apparent suicide.

The death of the British-born executive, a cricket-mad Indophile, marked a "huge loss for Tata Motors", said Deepak Rathore, director of Indian consultancy Emerging Markets Automotive Advisors.

He "had the right ideas about where Tata should head in product quality, service and new models", Rathore said.

Slym, 51, took over in 2012 as the once red-hot Indian car market was going into a deep descent due to a sharply slowing economy, high fuel prices and surging borrowing costs.

India's passenger car market, the sixth largest globally, fell 10% in 2013, the first drop in 11 years and a far cry from the scorching 28.2% growth it notched a couple of years earlier.

JLR sales offset domestic dive

A storming performance by storied JLR, a far-sighted 2008 purchase by former Tata group chief Ratan Tata to spread the Indian motor group's wings globally, has kept Tata Motors out of the red and now accounts for 95% of its profit.

In Tata Motors's most recently reported second-quarter, profit surged by 71% to 35.42 billion rupees ($558m) from a year earlier as JLR's robust performance offset a domestic dive.

On a standalone basis, Tata Motors' India operations swung to a second-quarter loss of 8.04 billion rupees from a profit of 8.7 billion rupees a year earlier on slumping sales.

"As far as profits go, JLR right now is Tata Motors," Rathore commented.

Underlining the company's poor health, Tata Motors reported Saturday passenger vehicle sales slid 27.85% to 10 974 units in January while sales of commercial vehicles plummeted 36.6% to 36 657 units.

Sales of the hatchback Nano, launched in 2010 and which flopped as aspirational Indians were turned off by its "world's cheapest car" branding, skidded 72% in the first three financial quarters to December 2013 from a year earlier.

Underscoring investor nervousness about Slym's loss, Tata Motors' shares tumbled what analysts described as a "knee-jerk" six percent Monday, a day after his death, before retracing some losses to finish down 3.5% at 348.85 rupees Friday.

But Tata Motors' quality, customer service and innovation problems go back long before the general vehicle industry began stalling, industry players say.

Slym told AFP late last year he was determined to create a "wonderful (customer) experience" to improve impressions of Tata Motors.

He said he was determined to "keep reinvigorating our lineup" and steer the Nano upmarket.

New models for Delhi Auto Expo

Just before Slym's death, the company brought out a power-steering variant of the Nano to broaden its appeal.

Last month, the company also showed off the first variant of a new generation of petrol engines called Revotron.

And Monday, just ahead of the February 7 - 11 auto show, it is set to unveil a heavily revamped compact sedan and hatchback.

"It was far too early to call him a turnaround king but he (Slym) was putting some necessary changes in motion," veteran car industry analyst Murad Ali Baig told AFP.

He had got the board's nod for a new product lineup until 2020 and to revamp manufacturing to eliminate customer complaints about post-purchase glitches.

"It will take time to find someone who can pick up the baton -- someone who knew the Indian market" like Slym, whose career was India-centric, said analyst Rathore.

Slym's "intense focus was on product quality," said Tata spokeswoman Minari Shah.

At the Delhi Auto Expo, 47 carmakers from around the globe from Ford to Volkswagen will launch 69 car and motorbike models - the most in the fair's 14-year history - and stage 15 global unveilings.

At Tata Motors, they are toning down the usual hoopla that goes with industry launches out of respect to Slym, but the group knows it must turn around quickly.

"The best thing to do is to go forward with his plans. It's the best tribute," Tata's Shah said.


Comments
  • Craig Morrison - 2014-02-02 14:29

    Tata motor vehicles are generally of very poor quality. Their after sales service in South Africa is dismal. You can wait months to have your vehicles repaired, whilst you are paying instalments.

  • pages:
  • 1